Our position following the Brexit vote

Posted by Lucinda Watson,
5th Jul 2016

The nation has decided that the UK is to leave the European Union and what is apparent in the short time since the result was announced is that the UK is in a state of flux until we invoke Article 50 as prescribed in the Lisbon Treaty.

There is no certainty when this might happen and accordingly the impact on our economy, our lives and our finances is subject to much speculation. However, what is clear is that the process will take a considerable period of time and there will be much political discussion and negotiation in the coming weeks and months.

Whilst the debate continues it is very much business as usual at Stellar. We remain committed to providing you and your clients with robust inheritance tax mitigation products and services that

use primary legislation

invest in tangible asset classes

are transparent

offer the prospect of above inflation returns

In these uncertain times it is important, in our view, that advisers and their clients consider the following points.

Time

Whilst there are arguably many more qualified voices on whether now is the right time to be in or out of any investment market; one thing unfortunately in the IHT planning world is that death at some point remains a certainty. Mitigation of IHT is legitimate and sound financial planning. By investing in services that utilise BPR you are planning two years and more in advance.

Delay will only generate one outcome and that is the loss of an estate’s value to IHT.

Diversification

We are proud of the fact that our asset-backed IHT services (ESP Growth and ESP Income) offer the greatest diversification in the market. We invest in forestry, farmland, hotels, property development, renewable energy and short term lending. Whilst Brexit may have some impact on these activities in the future; by diversifying capital across a broad range of strategies we do not have all your clients’ eggs in one basket.

In addition, our ESP AiM Portfolio Service contains up to 40 different companies listed on AIM, each with their own business strategies and objectives and again this diversification will benefit investors in the medium to long term.

Volatility

Our asset backed investments noted above do not suffer from significant market movements on a daily or even monthly basis. We seek opportunities where we can add value and most transactions are under due diligence for a number of months. We are selective and invest to a cautious mandate.

When considering ESP AIM , where there is greater volatility, we recommend taking a longer term view and trusting the knowledge and experience of our portfolio management team. They have worked through the peaks and troughs in the small-cap market over the past 20 years or so. Our performance stands up to scrutiny.

If clients remain concerned you can simply ask us to drip your capital into the market over a number of weeks or months. We never forget it is your money and we can afford you greater discretion.

Security

ESP Growth and ESP Income offer security to investors with asset-backed deals such as freehold forests and farmland in the UK, freehold hotels and tangible renewable energy installations.

In uncertain times these classes retain a long term store of value as the land that underpins them is in short supply.

Don’t forget you are investing with professionals and we are all, including our advisers, regulated. This is our job, our career and in our case as an owner managed business, our world. We are qualified professionals working for you and would like to be trusted by many more clients.

Taxation

Whilst the tax tail should never wag the investment dog, our services all set out to enable clients to mitigate their IHT liability. If growth over the next few years slows and your investments for example only return their original capital back, clients will be 40% better off than a do nothing strategy and keeping the money in the bank.

To conclude, it is an uncertain world in which we now find ourselves and we must move forward, doing nothing is not a strategy and we are here to help you and your clients make effective and beneficial tax planning decisions.

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